Smartphone Q4 Slows Down... Achieves 11 Trillion Operating Profit Last Year

Annual Operating Profit Up by 2 Trillion Despite COVID-19
iPhone Launch Causes 25% Drop in Q4 Shipments
Early Galaxy S21 Release Aims to Expand Q1 Market Share

[Asia Economy Reporter Han Jinju] Samsung Electronics' IT and mobile business division achieved an operating profit of 11 trillion KRW last year. In the fourth quarter, smartphone shipments declined due to the launch of Apple's iPhone 12 and the European lockdown, but operating profit remained at a level similar to the same period last year.

According to the financial investment industry on the 8th, Samsung Electronics' IM division's annual sales last year are estimated to be in the 100 trillion KRW range, with operating profit around 11 trillion KRW. Despite the impact of the novel coronavirus disease (COVID-19), this marks a significant improvement compared to the previous year. In 2019, operating profit was recorded at around 9 trillion KRW. In the fourth quarter, IM division sales were in the 21 trillion KRW range, and operating profit was about 2.5 trillion KRW, showing an increase of approximately 14% in sales and 1% in operating profit compared to the previous year.

Smartphone shipments in the fourth quarter were about 60 million units, a decrease of approximately 25% compared to the third quarter, which saw new products such as the Galaxy Note20 and Galaxy Z Fold2. Sales of tablets and wearable products are estimated to have exceeded expectations.

According to market research firm Strategy Analytics, Samsung Electronics' smartphone shipments last year amounted to 255 million units, a 13.6% decrease from 2019. This year, shipments are expected to increase by 20 million units (7.3%) to 275 million units. Samsung plans to expand its foldable lineup to more than three models to establish the category, while increasing the share of joint development manufacturing (JDM) in mid-to-low-end product lines to reduce costs.

Samsung Electronics will hold an Unpacked event on the 15th and release the Galaxy S21 series a month earlier than usual. To avoid repeating the failure of the underperforming predecessor, the launch price will be lowered by more than 200,000 KRW to block Apple's advance and precisely target the Huawei gap. The Galaxy Z Flip successor is scheduled to be unveiled in the second quarter, which is expected to bring changes to quarterly smartphone shipments.

Kim Unho, a researcher at IBK Securities, analyzed, "Even considering the growth of the smartphone market next year, Samsung Electronics' smartphone growth rate will exceed this. Since securing the Huawei gap is a variable, the focus will be on the European market rather than China, and efforts to improve profitability will also accompany this."

This content was produced with the assistance of AI translation services.